UPL (formerly United Phosphorus Ltd) plans to buy back shares worth ₹1,000 crore from investors at ₹875 apiece. The board on Wednesday approved the proposal to buy up to 14.56 per cent of the share capital by spending 5.71 per cent of free reserves.

Following the announcement, shares of the company increased four per cent to ₹689 even as the Sensex tanked 778 points on Wednesday. After the recent market crash, most companies are using the buyback route to reward investors and stem the fast slipping share price.

Buyback period

The company will set the buyback period after getting the requisite shareholders’ approvals. The company will utilise at least ₹550 crore of the amount earmarked as the maximum buyback and would purchase a minimum of 62,85,714 equity shares, said UPL in a statement on Wednesday.

Subject to the market price of the equity shares being equal to or less than the maximum buyback price, it said the indicative number of equity shares bought back would be 1,25,71,428 equity shares equal to 1.65 per cent of the paid-up share capital of the company as of March 2.

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If the equity shares are bought back at a price below the maximum buyback price, the actual number of equity shares bought back would exceed the proposed buyback shares, but will always be subject to the maximum buyback size, it added.

Powers of committee

The Board has constituted a buyback committee and has delegated the power to do all things at its discretion in connection with the buyback. While promoters hold 28 per cent in the company, foreign and domestic institutions own 42 per cent and 19 per cent, respectively. Retail investors account for about 11 per cent of equity holding.

The company earlier announced that its net profit in the December quarter was up 25 per cent to ₹1,179 crore against ₹944 crore in the same period last year. Its revenue increased 24 per cent to ₹11,297 crore (₹9,126 crore).